Patrick Henry

In spring 2015, for the 2nd drupa Global Trends report, a panel of 810 printers from around the world were asked about their investment intentions. 51% stated they would go for new print technology, 48% for finishing and 41% for prepress/workflow/MIS. It will be to research and clarify those decisions that most of them will attend drupa 2016.

Yet for many, the best route to improved and sustainable performance will be by investing not in simple replacement equipment (essential though that may be), but in integrated print applications that offer fresh products or services to meet evolving customer demands.

741 printers from around the world participated in the survey conducted for this report. We examined four markets—commercial, publishing, packaging and functional—with a total of 26 different applications. On average the panel had implemented 2.8 applications, clear evidence of the need to diversify their range of services.

At application level, market level and total sample level, the picture was absolutely clear—those that carry out detailed planning, integrate applications effectively, and market well, will spend more but get better net results.

That is not to say the results were the same for all applications and markets, simply that the overwhelming majority supported that hypothesis. One example of these variations was in the packaging market where the gains were less overall and in some cases were in reverse i.e. those who spent more on integration got a poorer net profit. We believe this is clear evidence that making new applications take off in the packaging market is more challenging for structural reasons than in other markets.

Growth in digital packaging

drupa 2016 will be a key milestone on the transition to digital packaging formats. Digital printing equipment is now opening the door to the corrugated, flexible packaging and folding carton markets previously not addressed by digital printing technologies. The packaging industry has been traditionally ruled by analog printing equipment, with only a minute percentage of around 7% currently printed with digital technology. However, shorter product life cycles, demand for faster time to market and a decline in average run length are accelerating the need for digital print.

Furthermore, brand owners are seeking the versioning, short runs and reduced environmental impact that are only available with digital printing technology. There is a growth in the use of digital production in the packaging and label sector, with flatbed inkjet printed corrugated and cartons, flexibles and metal packaging being just a few applications.

Many larger packaging converters are reluctant to adopt digital printing methods of production. The reasons include: the cost of equipment and consumables; format and productivity of digital presses compared with conventional processes; the finishing requirements; and specific functional properties of packs. However brand owners and retailers are continually trying to improve supply chains by reducing cost and speeding up lead times and at the same time are exploring new ways to engage with consumers.

Packaging supply chain optimization is now a major driver for getting products on shelf at the lowest possible cost. Digital production methods have increased flexibility by using late-stage customization to apply branding and market-specific information to a generic pack or label. This opens the way for more manufacturers to print packaging at the point of use, avoiding the costs and inflexibility of having to carry stocks. Inkjet technology is increasingly being added onto existing packaging lines, replacing slow and limited thermal transfer systems to provide better quality and flexibility.

Adoption and payback 

At the level of individual applications, it was clear that most printers are seeking diversity of products and services as revenues on conventional products and services steadily decline. Those serving the packaging market reported they had on average 2.0 of the applications listed, with the global split of packaging applications in the sample of 196 packaging printers as follows: 

The payback period in years for packaging applications ranged from less than one (interactive packaging) to five (digital printed corrugated). Payback for packaging is different from the other sectors as digital is far less prevalent in packaging. Digital packaging for corrugated and cartons is still in its infancy and companies are investing to educate and develop a market for the future and therefore payback on their investment takes much longer.

Digital labels, on the other hand, is a more mature market with a lot of competition and therefore it is becoming more price sensitive. Applications like personalized and interactive packaging tend to have a quicker payback because the market is less competitive, brand owners will pay a premium and the additional investment by the packaging convertor will be modest in comparison to investment in capital equipment.

The gains from good management practices varied somewhat between applications, as one would expect given the nature of specific applications. The packaging data was mixed, even pointing the other way in one case, i.e. better integration for packaging applications got a slightly worse net profit. We believe this is evidence that making new applications take off in the packaging market is more challenging than other markets; conservative converters and complex supply chain issues are the obvious issues.

The failure to date of digital print to make a significant impact in packaging despite many years of promotion by digital print manufacturers is evidence of this. The question is whether those that have tried to date will reap the benefit of experience as the new applications finally get traction in the market. drupa 2016 will be a key milestone in the transition to digital packaging.